Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Ultra Petroleum ( UPL) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Ultra Petroleum as such a stock due to the following factors:

  • UPL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $24.1 million.
  • UPL has traded 255,480 shares today.
  • UPL is down 3.1% today.
  • UPL was up 5.8% yesterday.

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More details on UPL:

Ultra Petroleum Corp., an independent oil and gas company, is engaged in the acquisition, exploration, development, production, and operation of oil and natural gas properties in the United States. UPL has a PE ratio of 5.0. Currently there are 2 analysts that rate Ultra Petroleum a buy, 3 analysts rate it a sell, and 8 rate it a hold.

The average volume for Ultra Petroleum has been 2.7 million shares per day over the past 30 days. Ultra has a market cap of $1.8 billion and is part of the basic materials sector and energy industry. The stock has a beta of 1.23 and a short float of 20.1% with 15.36 days to cover. Shares are down 3.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Ultra Petroleum as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ULTRA PETROLEUM CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The revenue growth greatly exceeded the industry average of 11.8%. Since the same quarter one year prior, revenues rose by 27.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ULTRA PETROLEUM CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, ULTRA PETROLEUM CORP turned its bottom line around by earning $1.54 versus -$14.24 in the prior year. This year, the market expects an improvement in earnings ($2.44 versus $1.54).
  • UPL's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 49.31%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The debt-to-equity ratio is very high at 659.10 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.31, which clearly demonstrates the inability to cover short-term cash needs.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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